two water companies are deciding whether to set their prices High or Low. The numbers in the box are the profit outcomes from each decision. Assuming the firms cannot collude or form a cartel, what would be the Nash Equilibrium of this game? Explain in your own words why this is a Nash Equilibrium?

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Blue Spring Purple Rain High Low Price Price $20,000 $50,000 High Price $20,000 $2,000 $2,000 $10,000 Low Price $50,000 $10,000 Blue Spring Purple Rain High Low Price Price $20,000 $50,000 High Price $20,000 $2,000 $2,000 $10,000 Low Price $50,000 $10,000

Answer rating: 100% (QA)

Answer Both businesses opt for inex... View the full answer